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N. Korean resort seeks foreign investors

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MOUNT KUMGANG, North Korea » Once praised as an experiment in reconciliation, this verdant tourist park on the southeast coast has become a symbol of the increased tensions between the two Koreas.

The golf course is devoid of caddies; banks and restaurants are chained and padlocked; and empty hotel rooms have grown musty.

Income from tourism here has plummeted since a South Korean visitor was shot dead in 2008 by a North Korean soldier while wandering one night into a nearby area that North Korean officials said was a military zone. South Korea then forbade its citizens from traveling here, and the South Korean developer of the park, Hyundai Asan, had to suspend the venture, for which it had exclusive rights from this authoritarian Communist state.

Now, the North Korean government, desperate to generate income, is trying to lure other foreign investors to Mount Kumgang, against the wishes of South Korea.

A senior North Korean tourism official gave a slide show presentation on Wednesday night to scores of Chinese businesspeople and officials shuttled to the park on a 21-hour bare-bones cruise from the Rason region in the far north of the country. The official, Kim Kwang Yun, told foreign reporters who had been given a rare opportunity to accompany the Chinese group to this secretive country that Mount Kumgang was open to investment from anywhere.

"Last night, I explained a lot to allow foreigners to see the beautiful sights of Mount Kumgang and also to help them understand tourism in the Rason and Mount Kumgang areas, and to help all investors who want to invest in this area," Kim said as he sat beneath chandeliers in the lobby of the Kumgang Hotel.

"If big delegations from Europe, Africa and other countries come to the Mount Kumgang area, we can always explain on a large scale about the Mount Kumgang area," he added.

The effort by North Korean officials to bring foreign investment into Mount Kumgang is the latest move in a chess match between the two Koreas over the park. New investment would help with infrastructure construction, and park operations could bolster tourist numbers. But the vast majority of the 2 million visitors who have come to the resort since its opening in 1998 have been South Koreans, and North Korean officials say they want to restart their partnership with Hyundai Asan. The very public wooing of foreign investors could be an effort to pressure the South Korean government to let Hyundai Asan rejoin the venture.

The North Koreans began raising the stakes on Aug. 22, when the official Korean Central News Agency reported that tourism officials had announced they were evicting any remaining South Korean employees from the park and contended they had the right to "start legal disposal" of South Korean assets, which amount to $443 million.

The South Korean government immediately said it would take legal and diplomatic measures to protect the assets, and Hyundai Asan warned that anyone who bought facilities at the resort would be implicated in international lawsuits.

Kim said the South Korean government was responsible for the conflict by putting "unilateral restrictions on tourism" for "political purposes." He added that the tensions would not scare off foreign investors.

"I think we already established the legal foundation for developing this Mount Kumgang area," he said. "Whether they will invest in this area is their choice."

An official at South Korea’s Unification Ministry said in an email on Saturday that the "Mount Kumgang tourism issue cannot be resolved by the unilateral measures by the North. It can be addressed by inter-Korean dialogue."

The drop in tourism has been particularly hard on North Korea, which has been grappling with food shortages caused by the breakdown of its food rationing system for years and more recently struggling with the effect of economic sanctions imposed by the United Nations. The sanctions were imposed mostly at the urging of the United States, which is trying to force the North Korean leader Kim Jong Il to end a nuclear weapons program.

State tourism bureaus have been bringing domestic tourists to Mount Kumgang to keep the operations going. Kim Kwang Yun said domestic tourists pay about 1,000 won, or $10 at the official rate, for a package that includes a night’s hotel stay and transportation to the main attractions. At a recent evening acrobatics show, the auditorium was packed with hundreds of North Koreans; many of the men wore olive or brown workers’ uniforms and women were clothed in brightly colored traditional dresses, or hanbok.

Kim estimated that about 2,500 visitors per day came to the park, 900 of them foreign, but it was unclear if that was an optimistic assessment. (He gave estimates of 3,000 to 4,000 tourists per day for the years when South Koreans were allowed to come.)

On Wednesday night Kim made his pitch to the Chinese businesspeople, many of whom were friends of Park Chol Su, a North Korean state enterprise executive who had organized the trip.

Exhausted from the hike they had taken to Kuryong Waterfall at the park earlier that day, the Chinese were ushered into an auditorium at 8:30 p.m. where they sat through a short video on the wonders of Mount Kumgang.

Several of the Chinese guests dozed off during the presentation. At a banquet afterward, some shook their heads at the thought of investing here. One tourism executive, Wu Yuchu, said the investment environment was not stable, comparing it to that of Libya.

"More than anything," he said, "businessmen value the safety of their money."


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